Cemetery Secrets: Questionable Spending Unearthed at Famous Cemetery

The News4 I-Team pieced together dozens of receipts from the Mount Olivet Cemetery in Frederick, Maryland, to show why whistleblowers say employees are using cemetery funds for personal gain. Tisha Thompson reports. (Published Thursday, April 7, 2016)

Mount Olivet Cemetery is one of the most historic spots in Frederick, Maryland. It’s the final resting place for dozens of soldiers from the War of 1812 and the Civil War, the first governor of Maryland, and the man who wrote our national anthem – Francis Scott Key.

And no one knows the property like Todd Fox.

“Pretty much whatever needed to be done, I was your guy,” Fox said.

For 17 years, Fox said he dug new graves and maintained the cemetery’s 140-acre property, until he discovered a pile of paper sitting in the cemetery’s break room.

“I glanced over the paper and I saw it was the cemetery credit card receipt from Home Depot,” he said.

In those receipts, obtained by the News4 I-Team, it is easy to see multiple purchases for building supplies from a store in Hagerstown, Maryland.

“I was like why would we drive the heck to buy something in Hagerstown when there’s two Home Depots in Frederick?” Fox asked. “That didn’t make any sense to me.”

Shane Study said he had just started working as the cemetery’s sales manager when another employee asked him for help installing a fence. “We showed up to his house, got into his truck and went to the Home Depot,” Study told the I-Team. “Rang up three or four hundred dollars of fence material and used the tax-exempt credit card from the cemetery.”

Mount Olivet is not a typical cemetery. It’s a "community-owned" 501(c)13 not-for-profit organization – meaning some employees get “tax-exempt” credit cards to make purchases without paying any sales tax.

The News4 I-Team found multiple purchases with the cemetery’s tax-exempt credit card from 2013 for 10-foot tall pressure treated posts, rapid set concrete and more than 120 “dog-eared pickets.”

When the I-Team asked Study, “Have you ever seen that many pickets on the cemetery property?” Study answered, “No. And I was there when it was installed at Rick’s house.”

Study explained how he helped build a picket fence using those same materials from the Home Depot receipt at the Hagerstown home of one their bosses, Assistant Superintendent Rick Reeder.

In that same pile of receipts, this time dating from 2014, the I-Team also found “29 gauge” “rib roofing panels” in the color red.

When the I-Team asked Study, “Is there a red roof anywhere on the cemetery property?” Study answered, “No.”

The I-Team then asked, “Where is there a red roof?” Study said, “Rick Reeder’s house in Hagerstown, Maryland.”

That red roof is hard to miss from the sky, as the I-Team discovered when Chopper4 flew over his home. The I-Team and Chopper4 couldn’t find a red roof anywhere on the cemetery's property.

"You end up on a slippery slope," according to Bruce Dubinsky. As Managing Director at Duff & Phelps, Dubinsky is an internationally recognized expert on financial fraud and is often called upon by the federal government to offer expert testimony on criminal fraud cases, including the Bernie Madoff trial.

Dubinsky explained to the I-Team, “If you take a credit card that was issued in the corporate not-for-profit name and go out and use that in conjunction with the tax exempt status and buy something personally, that’s a problem. That’s violating both the state rules on the tax exemption and the rules of using that corporate credit card.”

But Study said Reeder told him he could use the tax-exempt card. “He told us if we ever needed it, just to give him a shout and we could use it.”

And the I-Team found Reeder wasn’t the only one making questionable purchases with that tax-free credit card.

Matching up codes on just one receipt, the I-Team found a $349 dishwasher, a $579 microwave, a $1,000 refrigerator, a $1,100 range, and a $2,300 washer and dryer combo – in the color red. They were all purchased with the cemetery’s credit card tax-free.

The I-Team also found a tractor cover, purchased tax-free with the cemetery’s credit card at a Lowe’s store in Fredericksburg, Virginia, which is a three-hour drive from the cemetery.

That Lowe’s is near Lake Anna, where the superintendent has a lake house, Fox said.

According to the cemetery’s website and financial records, Ron Pearcey is the cemetery’s superintendent and lives in a home at the entrance to Mount Olivet Cemetery rent-free. But according to Virginia property records, Pearcey built a home now worth almost a half-million dollars on the banks of Lake Anna in 2007. That’s the same year all of those appliances were purchased with the cemetery's card.

Both Fox and Study said they’ve never seen the appliances anywhere on cemetery property.

“They’re just using it for their personal gain,” Study said.

Pearcey isn't just Reeder’s boss, he's his stepfather. That’s why Fox and Study told the I-Team they took what they found to the cemetery’s board of directors.

But the results weren’t what they expected. Study and Fox told the I-Team they got fired while Pearcy and Reeder kept working there.

The News4 I-Team reached out to Pearcey, Reeder and the cemetery’s board president, Colleen Remsberg, by writing detailed letters and calling.

Remsberg hung up.

Fraud expert Dubinsky told the I-Team, “The board has a duty to investigate it and go through a thorough investigation. If, in fact, they find that there was more problems and they don’t do anything about it, the IRS could come in and revoke the tax exempt status of the organization.” He explained that, generally, you can still get in trouble with the government for using a company card for personal expenses even if you offer to reimburse the money and taxes.

The cemetery did finally provide a statement through its attorney, saying Mount Olivet “takes these allegations seriously” and “after its investigation last Spring, the Board took prompt and appropriate action.”

But it wouldn't tell the I-Team what that action was, nor why the two men are no longer working at the cemetery, instead stating, “The Board does not wish to discuss its actions publicly” and “with respect to personnel issues, it is the Board’s practice to treat them as private and confidential.”

Prompting Study to say, “I want people to know what is going on there. It’s a piece of history. It should stay that way, and I think they’re running it into the ground.”

Mount Olivet released the following statement:

Reported by Tisha Thompson, produced by Rick Yarborough, and shot and edited by Steve Jones.